The ballers are getting chased out of Macau

High rollers are getting chased out of Macau, and recently there
have been two strong indications they won't be welcome to return.

The first is that rich gamblers didn't show for the
glorious opening of Studio City, the latest casino to open in
the world's gambling mecca on October 27. They weren't really
given the chance to.

The project — which was opened by Australian billionaire James
Packer and Lawrence Ho, the son of Macau's first casino
billionaire, Stanley Ho — was allotted 250 tables. None of them
were for high rollers.

The second indication is that the VIP junket businesses that once
enabled high rollers to leverage their handsome bets are shutting
down at an accelerated rate.

The junkets are pools of money that have traditionally guaranteed
investors returns of 1% to 2%. Experienced gamblers use that
money to play, and then they put a portion of their winnings back
into the pool and keep the rest.

The undoing of these is all part of the Chinese government's
vision for a new, more family-friendly Macau.

Since the summer of 2014, China has been cracking down on travel
to the island, installed cameras in VIP rooms, monitored
debit-card transactions on the territory, and limited the number
of tables allotted to new casino projects.

The industry has crumbled under the pressure, but no segment has
suffered like VIP play. VIP revenue declined 33.4% in October
from the same time last year. VIP volume declined 49%.

Consider this a part of President Xi Jinping's anticorruption
campaign too. The ongoing investigation into the spending habits
of government officials and businesspeople from all walks of life
has scared many Chinese people out of doing anything that could
remotely be considered an ostentatious display of wealth.

That is, in part, why the VIP rooms are emptying.

The other part is that the junkets have been hit by a few heists
over the last two years, with thieves absconding with as much as
$1.3 billion from junket pools last year.

Jason Ader, a hedge fund manager and former star casino analyst
on Wall Street, called the $1.3 billion heist Macau's "Lehman
moment," referring to the now defunct investment bank whose
bankruptcy signaled the beginning of the global financial crisis.

In 2014, 16% of Macau's junkets went out of business. Now it is
rumored that Dore and Jimei, two junkets that operated inside the
Wynn Macau, will also shut down.